Research › Search › Judgment

Kerala High Court · body

2014 DIGILAW 237 (KER)

Khadeeja Makkar v. State of Kerala

2014-03-12

A.M.SHAFFIQUE, MANJULA CHELLUR

body2014
JUDGMENT : A.M. Shaffique, J. These revisions are filed challenging the orders passed by the Kerala Value Added Tax Appellate Tribunal in T.A.(VAT) Nos.201/2010 and 202/2010. 2. The issue relates to an order of penalty imposed by the Intelligent Officer. The place of business of the dealer was inspected by Intelligence Squad on 25.10.2007 and they have prepared stock inspection report incorporating stock analysis found at the business premises during inspection. Though the assessee was called upon to produce the books of accounts, the assessee did not produce any such books as according to the assessee, no books of account was available. The Intelligence Officer therefore proceeded to consider the turnover on the basis of her consumption of power. Accordingly, the total turnover suppressed was found out by computing the value of the aggregate taking into account the production on the basis of the power consumption for an hour. The stock analysis was also considered and the Intelligence Officer imposed a penalty of double the amount of tax sought to be evaded. Separate appeals were filed before the Dy. Commissioner (Appeals) and having regard to the factual situation involved in the matter, the Dy. Commissioner (Appeals) had reduced the amount of penalty to 150% of the tax due. On a further revision before the Tribunal, the Tribunal having agreed with the finding of fact of the assessing officer and the appellate tribunal in exercise of its discretion reduced the liability to pay tax at 100% of the tax sought to be evaded. 3. Heard the learned senior counsel appearing for the revision petitioner as well as the learned Government Pleader appearing on behalf of the Department. 4. The main contention urged by the petitioner is that there was no obligation on the part of the petitioner to maintain any books of accounts as the turnover of the petitioner was not within the limit by which tax was liable to be paid. Therefore, absence of records could not have been a reason to make an estimate of the turnover. It is further argued that the turnover was estimated based only on the current consumption which is not proper. It is also contended that for making such an estimation, the Intelligence Officer has taken into consideration the approximate product manufactured during one hour period and thereafter computing on the basis of the value. It is further argued that the turnover was estimated based only on the current consumption which is not proper. It is also contended that for making such an estimation, the Intelligence Officer has taken into consideration the approximate product manufactured during one hour period and thereafter computing on the basis of the value. It is contended that this approach is totally erroneous as there is no other material to come to a conclusion that such quantity of products has been manufactured from the said unit. That apart, it is contended that the unit has only started production and therefore it did not have the required production capacity as estimated by the Intelligence Officer. 5. The appellant therefore raised the following questions of law: "(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in law in confirming the imposition of penalty by the Intelligence Officer for the reasons stated by it, though the quantum thereof is reduced? (ii) Is not the addition retained by the Appellate Tribunal excessive and arbitrary considering the small nature of the business during the period? (iii) Has not the Appellate Tribunal committed an error in following the Supreme Court judgment in Melton India's case ( 2007 (5) VST 613 ) for adopting current consumption for the purpose of imposing penalty instead of invoking other methods for estimating the turnover ". 6. The learned Government Pleader, on the other hand submits that the authorities have considered the matter in accordance with the procedure prescribed and the questions of law raised by the revision petitioner does not arise for consideration. 7. Learned counsel for the petitioner submits that during assessment proceedings if it is found that the turnover of the petitioner is more than Rs.10 lakhs, then only the petitioner has the obligation to pay tax. Only in that situation, it could actually be found as to whether the petitioner has conceded suppressing any turnover. At this stage, proceedings computing the turnover purely on the basis of power consumption will not give the correct result as it is a unilateral fixation of the turnover as estimated by the Intelligence Officer. It is not in dispute that while conducting a method of assessment, power consumption is also a fact to be considered. However, that alone might not be a reason for computing the total turnover. It is not in dispute that while conducting a method of assessment, power consumption is also a fact to be considered. However, that alone might not be a reason for computing the total turnover. In that view of the matter, we are of the view that if the assessment proceedings are completed, then the Intelligence Officer can proceed on the basis of such assessment. The assessment officer can also impose penalty if it is found that there was intentional suppression of turnover. 8. Having regard to the aforesaid circumstances, we are of the view that these revisions can be allowed setting aside the orders of penalty and giving liberty to the assessing officer to take proceedings afresh after completing the assessment in respect of the aforesaid proceedings. With the above observations, appeals are allowed.